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We are all used to the idea that if you are late filing your self-assessment tax return the penalty is fixed at £100. From 6 April 2011 a series of late filing penalties apply. So if you are late in filing your 2010-11 return (latest date for electronic filing is 31 January 2012) these are the penalties you face:
• Returns filed one day late: penalty of £100
• Returns filed more than three months late: £10 per day, up to a maximum of £900
• Returns filed more than six months late: £300 or 5% of the tax due, whichever is the higher.
• Returns filed more than twelve months late: £300 or 5% of the tax due, whichever is the higher.
These penalties are cumulative; for example, if the taxpayer files the return six and a half months after the due date, the total penalties due will be £1,000 plus the higher of £300 or 5% of the tax due.
This demonstrates that even if the 31 January filing date has been missed it is still beneficial to seek to submit the return as soon as possible after the due date in order to reduce the amount of penalties due.
If you add to this the benefit of knowing your self-assessment liabilities as soon as possible after the end of the tax year, then the case for filing on time is compelling.
Disclaimer – Please note: The ideas shared with you in this article are intended to inform rather than advise. Taxpayers’ circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
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